Employing cost sharing to motivate the efficient implementation of distributed energy resources

David Brown and David Sappington

Energy Economics, 2019, vol. 81, issue C, 974-1001

Abstract: We consider the design of cost-sharing policies to motivate electricity distribution utilities to manage the costs of distributed energy resource (DER) projects. The optimal share of realized cost savings (s) that is awarded to the utility takes a relatively simple form in certain settings. More generally, s can vary with the prevailing environment in subtle and sometimes counterintuitive ways. For instance, s may increase as cost savings become less onerous for the utility to secure. Gains from affording the utility a choice among cost-sharing policies typically are minimal.

Keywords: Distributed energy resources; Procurement; Regulation (search for similar items in EconPapers)
JEL-codes: L51 L94 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:81:y:2019:i:c:p:974-1001

DOI: 10.1016/j.eneco.2019.05.012

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